Gold-As Investment Perspective: Dissertation Project Report On " "

DISSERTATION PROJECT REPORT ON
“Gold- As Investment Perspective ”
SUBMITTED IN THE PARTIAL FULFILLMENT FOR THE AWARD OF DEGREE OF

POST GRADUATE IN DIPLOMA MANAGEMENT BATCH
INSTITUTE OF MANAGEMENT STUDIES, GHAZIABAD
(Approved by AICTE, Govt of India)
(2019-2021)
SUBMITTED TO: SUBMITTED BY:

Mr. Gaurav Dawar Prakshal Jain
BM-019121
INTRODUCTION
Gold – An Investment Paradise
Gold has been synonymous to wealth and prosperity through the ages. The history of Gold
dates back to as early as 4000 BC when the prehistoric men used it as a tool. Since then Gold
has filled the pages of history as the divine metal that has attracted the attention of men –
powerful and otherwise. Gold was the source of power for the kings. Wars were waged; lives
were lost as kingdoms piled up and hoarded tonnes of Gold. In the modern history, Gold
became the international currency as the Gold standard came into existence. Even after the
dismantling of Gold standard, Gold existed as the backbone of international trade and
economics as the US accumulated tones of yellow metal. Till today, Gold has retained its
basic use as a commodity without losing its sheen as a currency.
Gold, because of its ability to protect the wealth of investors can be an ideal addition to a
portfolio. Also the short-term fluctuations in Gold offer good potential for trading. Gold has
been on its long-term upwards trajectory which began in early 2001. This long-term move
has been punctuated by short-term pullbacks offering opportunities for late entrants to join
the bandwagon. With the US economy outgrowing the league of developed nations during the
last two years coupled with the worsening of long-term structural weaknesses and the
subsequent movements in the USD have moved the focus away from Gold’s use as a
commodity. However the long-term fundamentals of the yellow metal have also undergone a
significant change with the mining output falling quite steadily during the last decade coupled
with an evergreen demand especially from Asia.
This report analyses the long-term and short-term fundamental factors expected to move Gold
prices. We believe that the short-term weakness expected in gold is a great opportunity for
the late-comers to join the great Gold. Strategically, gold is one of the two most important
commodities on the planet along with crude oil. Gold has been historically recognized as the
ultimate store of value and method of payment.
Literature Review
Mulyadi and Anwar(2012) It is important to have a portfolio in investment to
diversify the investment to different kinds of instruments. Based on previous
research, it is concluded that gold is a good portfolio diversifier, a hedge
against stock and safe haven in extreme stock market condition. As an
investment instrument, stock is exposed to macroeconomic risks and global
stock market risks. In this research, we conduct a comparison between the
stock investment and gold investment by using the probit econometric model
and data from 1997 to 2011. The final result obtained from the model shows
that the gold investment is more advantageous than the stock investment.
Graham Smith(2011) He empirically investigated the relationship between

gold prices and stock price indices on US market using Unit Root Test,
Johansen’s Co Integration Test, Vector auto regression and VECM. He
confirmed that The short-run correlation between return son gold and returns on
US stock price indices is small and negative and for some series and time
periods insignificantly different from zero.
Bhunia and Mukhuti(2010) in their study presented the gold price and stock
market moves in an opposite direction when the economy is in a downturn and
stock markets are going down, investors tend to park their funds in gold and
wait out the storm. As the gold price rises, Indian investor stand to invest less in
stocks, causing stock prices to fall. This study made on the co- movements of
four macro economic variables interns of gold price, stock price, reflex change
rate and the crude oil Price based on 21 years data using econometric models for
the periods from January 1989 To September 2009.
Kaliyamoorthy and Parithi(2011) have made a study to examine the
relationship between gold price and stock market for the period from June 2009
to June 2010. They prove that there is no relationship with the stock market and
gold price and stock market is not aground for rising gold price.
Sherman(1983) in his study presented that gold markets behaved efficiently-
new information is quickly incorporated into the price. Under conditioning of
uncertainty many investors turn to gold because it is a “Currency without
borders”-a highly liquid and secure asset that can be accessed at any time. In
times of economic distress most asset classes tend to move in the same
direction. Gold is correlated to many assets, including equities and bonds. The
economic forces that determine the price of gold are opposed to the forces that
determine other financial assets. Therefore, gold play an important role as a
diversifier, acting as a stabilizing influence for investment portfolios. Thus a
portfolio mix of equities with gold would result in a portfolio of assets moving
independently, with low correlation.
Objective of the Study
 To study the current investment scenario
 To analyze the different options available for investment options
 To overview the different ways of investment in gold
 To acquaint the investor with the factors that affects the investment
scenario in gold.
Research Methodology
The topic related concepts are done on the basis of the secondary sources.
The analysis part is done with the help of Microsoft excel by computing the
required output. Finally the conclusions and recommendations has been
written on the self finding basis.
References
http://www.investopedia.com/
http://www.moneycontrol.com/
https://www.nseindia.com/
https://www.bseindia.com/markets/goldreports.aspx
https://www.managementstudyguide.com/Goldinvestments.htm
https://www.goldresearchinc.com/
www.gold.org

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DISSERTATION PROJECT REPORT ON

“Gold- As Investment Perspective ”

SUBMITTED IN THE PARTIAL FULFILLMENT FOR THE AWARD OF DEGREE OF

SUBMITTED TO: SUBMITTED BY:

Graham Smith(2011) He empirically investigated the relationship between

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